NAB the only bank not to pass on full rate cut, but claims to still have lowest rates

NAB will pass on only 20 basis points of the official RBA 25-basis-point cut announced yesterday, a move that is likely to annoy borrowers, despite the bank maintaining the lowest standard variable rate of the big four banks with its current rate of 7.67% reducing to 7.47% on November 7.

NAB's rate cut will be a week earlier than Westpac, which will reduce its standard variable rate to 7.61% and ANZ (down to 7.55%), but three days later than the Commonwealth Bank (down to 7.56%).

Lisa Gray, group executive of NAB personal banking, says the bank has had lowest standard variable home loan rate of the major banks for more than 28 months. 

Gray says that volatile overseas markets and impending global banking security requirements has pushed up the costs of providing funds for lending.

“We are committed to offering the most competitive standard variable interest rate possible and these decisions are never taken lightly. However, the current instability in Europe presents us with additional funding pressures, as costs of funds continue to rise,” she says. 

While the bank did not pass on the full rate cut, it will cut deposit interest rates by the full 25 basis points on some products. 

Other major lenders to announce they are passing on the full rate cut include Westpac subsidiaries the Bank of Melbourne and St George which have both cut their standard variable rate to 7.55%. The rate cuts will take effect on November 14, in line with parent Westpac. 

The Bank of Queensland says it will pass on the full 25 basis point cut on November 11 bringing its standard variable rate home loan to 7.61% with CEO and managing director Stuart Grimshaw saying it was ‘the right thing to do’.  

“A lot of people around Australia are struggling and, with Christmas around the corner, offering our customers this rate relief is the right thing to do,” he adds.

ANZ chief executive Australia Philip Chronican says the bank will be passing on the rate cut despite higher funding costs.